The “Story of the Foreign Corrupt Practices” highlights how Congress clearly understood and appreciated the many difficult foreign business conditions facing U.S. companies.
For instance, the 1976 SEC Report on Questionable and Illegal Corporate Payments and Practices, on which Congress placed great reliance during its multi-year legislative process leading to the FCPA, documented a wide range of foreign corporate payments to a variety of recipients for a variety of reasons including payments “to persuade low-level governmental officials to perform functions or services which they are obligated to perform as part of their governmental responsibilities, but which they may refuse or delay unless compensated.”
Congress could have legislated as to the wide range of foreign corporate payments brought to its attention and certain bills introduced during the multi-year legislative process leading to the FCPA did indeed capture a wide range of payments. Yet, in passing the FCPA Congress intended to capture only a narrow range of foreign corporate payments.
In the words of Senator William Proxmire (a leader in the Senate on the issue) “we are not concerned so much about the low level grease payments.” On the House side, Representatives John Murphy and Bob Eckhardt stated the same.
“This bill is not concerned with so-called grease or facilitating payments, such as may be necessary to some petty clerk to speed documents through a bureaucracy.”
“The bill does not address itself to ‘grease’ or ‘facilitating’ payments made to low-level clerical or ministerial government officials.”
The Senate and House reports just prior to enactment of the FCPA are clear on this issue. For instance, the House Report states:
“[A] gratuity paid to a customs official to speed the processing of a customs document would not be reached by the bill. Nor would it reach payments made to secure permits, licenses, or the expeditious performance of similar duties of an essentially ministerial or clerical nature which must of necessity by performed in any event. While payments made to assure or to speed the proper performance of a foreign official’s duties may be reprehensible in the United States, the committee recognizes that they are not necessarily so viewed elsewhere in the world and that it is not feasible for the United States to attempt unilaterally to eradicate all such payments. As a result, the committee has not attempted to reach such payments.”
Consistent with this legislative intent, the original FCPA carved out of the definition of “foreign official” “any employee of a foreign government or any department, agency, or instrumentality thereof whose duties are essentially ministerial or clerical.”
Call it the FCPA’s original de facto facilitating payments exception.
In 1988 the FCPA was amended including by making the original de facto exception a stand-alone express exception currently found in the law for payments made in connection with “routine governmental action.”
In the minds of many, this express legislative exception has largely been “read out of the FCPA” by the enforcement agencies through their enforcement decisions.
That, however, is not the point of this post.
The point of this post is that the same difficult business conditions in the global marketplace that Congress learned of 40 years ago are still present today.
The recent ASEAN (Association of South East Asian Nations) Business Outlook Survey highlights this point.
According to the survey responses.
The root causes of many FCPA enforcement actions are foreign trade barriers and distortions.
- Trade barriers and distortions create bureaucracy.
- Bureaucracy creates points of contact with foreign officials.
- Points of contact with foreign officials create discretion.
- Discretion creates the opportunity for a foreign official to misuse their position by making bribe demands.
A reduction in bribery will not be achieved without a reduction in trade barriers and distortions.
As the above survey responses indicate, the more things change the more things stay the same.